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Shaanxi Lawyers Threaten Nation's Largest Private Suit Against Government (story in Chinese)

September 17, 2004

According to a report originally carried in Xinhua, Chinese lawyers for PRC private oil exploration firms in Shaanxi province are threatening to launch China's largest suit against the provincial government, seeking over 5 billion yuan ($600 million). Over the past 10 years, the Shaanxi provincial government appears to have been agressively encouraging oil exploration in 15 counties in the north of the province. Following reports in 2002 of environmental damage, resource waste, and economic losses, the central government issued orders to clamp down on exploration activity. Since then, local governments have closed wells but left unaddressed outstanding compensation issues (likely including environmental cleanup and economic losses). These suits appear to be an effort by private PRC firms to recoup some of their losses. They also illustrate the ability of some private PRC companies to use the legal system to challenge government regulation.